-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OuyxcZ2QsU+pzPFhZt5bJxMesYN7WAY4dYrkDMy2DRiutyJGTwXCM9ogwK3oLjQ7 YXMOaUpBO72kcMALMHsI1A== 0000898430-96-003775.txt : 19960814 0000898430-96-003775.hdr.sgml : 19960814 ACCESSION NUMBER: 0000898430-96-003775 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960629 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LESLIES POOLMART CENTRAL INDEX KEY: 0000866048 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 930976447 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18741 FILM NUMBER: 96611168 BUSINESS ADDRESS: STREET 1: 20222 PLUMMER ST CITY: CHATSWORTH STATE: CA ZIP: 91311 BUSINESS PHONE: 8189934212 MAIL ADDRESS: STREET 1: 20222 PLUMMER ST CITY: CHATSWORTH STATE: CA ZIP: 91311 10-Q 1 FORM 10-Q FOR PERIOD ENDED JUNE 29, 1996 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 29, 1996. OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to _____________________ Commission file number 0-19096 LESLIE'S POOLMART (Exact name of registrant as specified in its charter) California 93-0976447 (State or Other Jurisdiction of (I.R.S. Employer Identification Incorporation or Organization) No.) 20222 Plummer Street, Chatsworth, California 91311 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (818) 993-4212 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock (Title of Class) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____ ----- Applicable only to issuers involved in bankruptcy proceedings during the preceding five years: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ______ No _______ APPLICABLE ONLY TO CORPORATE REGISTRANTS: As of August 1, 1996 the number of outstanding shares of the Registrant's common stock was 6,542,972. This Report on Form 10-Q contains 10 pages. ================================================================================ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS LESLIE'S POOLMART ----------------- CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
June 29, December 30, 1996 1995 ----------- ------------- ASSETS (UNAUDITED) - ------ CASH $ 123 $ 74 RECEIVABLES, NET 4,188 2,235 INVENTORIES, NET 50,097 34,303 PREPAID EXPENSES 2,646 1,876 DEFERRED TAX ASSETS 2,321 2,321 -------- ------- TOTAL CURRENT ASSETS 59,375 40,809 -------- ------- PROPERTY, PLANT AND EQUIPMENT, NET 33,294 29,545 GOODWILL, NET 8,425 8,550 OTHER ASSETS 659 625 -------- ------- $101,753 $79,529 ======== ======= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 32,263 $ 8,761 LINE-OF-CREDIT BORROWINGS 8,766 16,956 CURRENT PORTION OF LONG-TERM DEBT 2,120 2,085 INCOME TAXES 2,959 --- -------- ------- TOTAL CURRENT LIABILITIES 46,108 27,802 DEFERRED INCOME TAXES 1,963 1,963 LONG-TERM DEBT, NET OF CURRENT PORTION 7,349 7,843 CONVERTIBLE SUBORDINATED DEBENTURE 10,000 10,000 SHAREHOLDERS' EQUITY - -------------------- COMMON STOCK 32,379 32,100 RETAINED EARNINGS 3,954 (179) -------- ------- TOTAL SHAREHOLDERS' EQUITY 36,333 31,921 -------- ------- $101,753 $79,529 ======== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED BALANCE SHEETS -2- LESLIE'S POOLMART ----------------- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
Three Months Ended ----------------------- June 29, July 1, 1996 1995 ---------- ---------- SALES $ 88,835 $ 71,945 COST OF SALES 50,599 42,062 ---------- ---------- GROSS PROFIT 38,236 29,883 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 20,908 17,686 AMORTIZATION OF ACQUISITION COSTS 63 59 ---------- ---------- INCOME FROM OPERATIONS 17,265 12,138 INTEREST EXPENSE 756 699 ---------- ---------- INCOME BEFORE INCOME TAXES 16,509 11,439 INCOME TAX PROVISION 6,851 4,747 ---------- ---------- NET INCOME $ 9,658 $ 6,692 ========== ========== NET INCOME PER SHARE OF COMMON STOCK $ 1.41 $ 1.01 ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AND COMMON STOCK EQUIVALENTS 6,866,985 6,622,313
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -3- LESLIE'S POOLMART ----------------- CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
Six Months Ended ----------------------- June 29, July 1, 1996 1995 ---------- ---------- SALES $ 106,899 $ 87,305 COST OF SALES 64,405 53,596 ---------- ---------- GROSS PROFIT 42,494 33,709 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 33,712 28,373 AMORTIZATION OF ACQUISITION COSTS 127 119 ---------- ---------- INCOME FROM OPERATIONS 8,655 5,217 INTEREST EXPENSE 1,590 1,326 ---------- ---------- INCOME BEFORE INCOME TAXES 7,065 3,891 INCOME TAX PROVISION 2,932 1,615 ---------- ---------- NET INCOME $ 4,133 $ 2,276 ========== ========== NET INCOME PER SHARE OF COMMON STOCK $ .61 $ .34 ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AND COMMON STOCK EQUIVALENTS 6,821,833 6,607,950
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. -4- LESLIE'S POOLMART ----------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Six Months Ended -------------------- June 29, July 1, 1996 1995 --------- -------- CASH FLOWS FROM OPERATING ACTIVITIES - ------------------------------------ NET INCOME $ 4,133 $ 2,276 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: DEPRECIATION AND AMORTIZATION 2,227 1,387 NET CHANGE IN RECEIVABLES, 8,714 4,525 INVENTORY AND PAYABLES OTHER, NET (806) (1,190) ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 14,268 6,998 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES - ------------------------------------ PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (5,849) (7,199) PROCEEDS FROM DISPOSITIONS OF PROPERTY, PLANT AND EQUIPMENT --- 313 ------- ------- NET CASH USED IN INVESTING ACTIVITIES (5,849) (6,886) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES - ------------------------------------ NET LINE-OF-CREDIT PAYMENTS (8,190) (7,208) ADDITIONS TO LONG-TERM DEBT --- 10,000 PAYMENTS OF LONG-TERM DEBT (459) (2,943) PROCEEDS FROM ISSUANCE OF COMMON STOCK 279 81 ------- ------- NET CASH USED IN FINANCING ACTIVITIES (8,370) (70) ------- ------- NET INCREASE IN CASH 49 42 CASH AT BEGINNING OF PERIOD 74 63 ------- ------- CASH AT END OF PERIOD $ 123 $ 105 ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -5- LESLIE'S POOLMART NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 29, 1996 (UNAUDITED) (1) PRESENTATION OF FINANCIAL INFORMATION The condensed consolidated financial statements included herein have been prepared by Leslie's Poolmart (the "Company"), without audit, and include all adjustments of a normal recurring nature which are, in the opinion of management, necessary for a fair presentation of the results of operations for the six month periods ended June 29, 1996 and July 1, 1995 pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures in these financial statements are adequate to make the information presented not misleading. The following material under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" is written with the presumption that the users of the interim financial statements have read or have access to the Company's 1995 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 1996. This document contains the latest audited financial statements and notes thereto, together with Management's Discussion and Analysis of Financial Condition and Results of Operations as of December 30, 1995 and for the year then ended. The results of operations for the six months ended June 29, 1996 and July 1, 1995 are not indicative of the results for a full year. (2) ORGANIZATION AND OPERATIONS Leslie's Poolmart is a specialty retailer of swimming pool supplies and related products. The Company currently markets its products under the trade name Leslie's Swimming Pool Supplies through 260 retail stores in 27 states and through mail order catalogs sent to selected swimming pool owners. The Company also repackages certain bulk chemical products for retail sale. The Company's business is highly seasonal as the majority of its sales (79% in 1995 and 1994) and all of its operating profits are generated in the second and third quarters. (3) INVENTORIES Inventories consist of the following:
June 29, July 1, 1996 1995 ------- ------- (in thousands) Raw materials and supplies $ 1,964 $ 1,375 Finished goods 48,133 41,054 ------- ------- Total Inventories $50,097 $42,429 ======= =======
(4) RECENT ACCOUNTING PRONOUNCEMENT In the first quarter of 1996, the Company adopted Statement of Financial Accounting Standard No. 121 "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of" (SFAS 121). The adoption of SFAS 121 did not impact the Company's financial position or its results of operations. -6- ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Leslie's Poolmart is the leading specialty retailer of swimming pool supplies and related products in the United States. The Company currently markets its products through 260 Company-owned retail stores in 27 states and through a nationwide mail order catalog. Leslie's is vertically integrated, operating a chemical repackaging facility in Los Angeles, California. It supplies its retail stores from distribution facilities located in Chatsworth, California; Dallas, Texas; and Bridgeport, New Jersey. SEASONALITY AND QUARTERLY FLUCTUATIONS The Company's business exhibits substantial seasonality which the Company believes is typical of the swimming pool supply industry. In general, sales and net income are highest during the second and third fiscal quarters which represent the peak months of swimming pool use. Sales are substantially lower during the first and fourth quarters when the Company will typically incur net losses. The Company expects that its quarterly results of operations will fluctuate depending on the timing and amount of revenue contributed by new stores and, to a lesser degree, the timing of costs associated with the opening of new stores. The Company attempts to open its new stores in the first quarter or early in the second quarter in order to position itself for the following peak season. RESULTS OF OPERATIONS In the second quarter ended June 29, 1996, the Company reported a net income of $9,658,000 or $1.41 per share, as compared to a net income of $6,692,000 or $1.01 per share for the second quarter of 1995. For the first six months of 1996, the company reported net income of $4,133,000 or $.61 per share as compared to net income of $2,276,000 or $.34 per share in the first half of 1995. Year to date, 35 new stores have been opened bringing the total store count to 259 as of June 29, 1996.
1996 compared to 1995: Sales --------------------------------------- (in thousands) Three Months Ended Six Months Ended ------------------ ------------------ June 29, July 1, June 29, July 1, 1996 1995 1996 1995 -------- ------- -------- ------- Retail $83,436 $66,569 $ 99,897 $80,480 Mail Order 3,764 3,966 4,521 4,667 Service Departments 1,635 1,410 2,481 2,158 -------- ------- -------- ------- $88,835 $71,945 $106,899 $87,305
Sales for the second quarter ended June 29, 1996 increased 23.5% over the second quarter of 1995, bringing the year-to-date sales growth to 22.4%. Retail sales grew 25.3% in the second quarter and 24.1% year-to- date, reflecting an increase in the total number of Company stores in operation as well as comparable store sales gains of 16.1% for the quarter and 14.5% for the year-to-date period. The increase in comparable store sales resulted from the improved weather conditions experienced in 1996 relative to 1995, the maturing of new stores opened over the last several years, and from continued growth of commercial sales. In total, commercial sales grew by approximately 25% in the second quarter and 27% for the year-to-date period as compared to last year. -7- Mail order catalog sales declined 5.1% in the second quarter and 3.1% year-to-date as compared to prior year. New store openings in a number of strong mail order markets continue to cannibalize mail order sales this year. Service Department sales increased 16.0% in the second quarter, and 15.0% year-to-date, due to an increased number of service technicians operating in existing service areas, as well as generally improved execution. The gross margin for the three months ended June 29, 1996 equaled 43.0%, 1.5% of sales higher than was reported in the second quarter of 1995. This brings the year-to-date gross margin to 39.8%, 1.2% of sales higher than the first half of 1995. Gross profit represents sales less the cost of services and purchased goods, chemical repackaging costs, and non- administrative occupancy costs. The gross margin increase in 1996 reflects increased retail pricing taken in early 1996, offsetting some product cost increases seen in 1995 and again in 1996. Store and distribution center rents also declined 0.1% of sales year-to-date with the slightly lower number of new store additions this season and the improved sales performance compared to 1995. In the second quarter of 1996, selling, general and administrative expenses equaled $20,908,000, an 18.2% increase above the $17,686,000 incurred in the second quarter of 1995. This brings the year-to-date selling, general and administrative expenses to $33,712,000, up 18.8% over the prior year. The 18.8% year-to-date growth in selling, general and administrative expenses reflects higher operating expenses associated with the addition of 35 stores in 1996. Much higher depreciation expense was also incurred year-to-date in 1996 versus 1995 due to the large capital expenditures made in the last two years associated with the greater new store additions and investments in information technology. Excluding depreciation, selling, general and administrative expenses grew only 16.6% year-to-date as compared to prior year. Interest expense equalled $756,000 in the second quarter of 1996, and $1,590,000 year-to-date, up from $699,000 and $1,326,000 in the same fiscal periods in 1995. The higher interest expense was primarily the result of increased borrowings due to continued capital spending and working capital requirements related to new store openings. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Changes in Financial Condition Between December 30, 1995 and June 29, 1996, total current assets increased $18,566,000, principally the result of inventory which increased $15,794,000 during the period. The inventory increase resulted primarily from the seasonal nature of the Company's business, and the increased number of stores in operation in 1996. Over the same period, current liabilities increased $18,306,000, largely due to a $23,502,000 increase in accounts payable and accrued liabilities, relating primarily to favorable dating terms on trade payables extended by vendors. Liquidity and Capital Resources For the first two quarters ending June 29, 1996, net cash provided by operating activities was $14,268,000 compared with $6,998,000 in the first half of the prior year. Higher earnings and improved working capital management produced the higher cash flow from operating activities in 1996. For the first six months ended June 29, 1996, cash used in investing activities was $5,849,000 compared with $6,886,000 in the first two quarters of the prior year. This decrease results from reduced capital expenditures in 1996 as compared to 1995 primarily due to the lower number of new store openings in 1996 and the opening of the New Jersey distribution center in 1995. -8- Cash used in financing activities was $8,370,000 in the first six months of 1996 compared with $70,000 in 1995. In the second quarter of 1995, the Company completed a private placement of its $10 million 8% Convertible Subordinated Debentures. The Company believes that its internally generated funds, as well as its borrowing capacity, are adequate to meet its working capital needs, maturing obligations and capital expenditure requirements, including those relating to the opening of new stores. Recent Accounting Pronouncement In the first quarter of 1996, the Company adopted Statement of Financial Accounting Standard No. 121 "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of" (SFAS 121). The adoption of SFAS 121 did not impact the Company's financial position or its results of operations. PART II. OTHER INFORMATION ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The 1996 Annual Meeting of Shareholders of the Company was held on May 30, 1996. At the Annual Meeting the Shareholders elected six directors of the Company for a term of one year, approved the amendment of the Company's 1990 Stock Option Plan to increase the number of options issuable under the plan, and ratified Arthur Andersen, LLP as the Company's independent auditors for the current fiscal year. The votes for the election of directors were:
"FOR" "WITHHELD" Abstentions/Non-Votes ----- ---------- --------------------- John A. Canning, Jr. 5,394,713 109,407 Murray A. Dashe 5,394,611 109,509 Michael J. Fourticq 5,395,343 108,777 Richard H. Hillman 5,395,343 108,777 Dr. Dale R. Laurance 5,394,713 109,407 Brian P. McDermott 5,395,343 108,777
The votes for the approval of the Amendment to the 1990 Stock Option Plan were:
Shares Voted "FOR" Shares Voted "AGAINST" Abstentions/Non-Votes - ------------------ ---------------------- --------------------- 2,986,183 1,164,342 1,353,595
The votes for the ratification of the selection of independent auditors were:
Shares Voted "FOR" Shares Voted "AGAINST" Abstentions/Non-Votes - ------------------ ---------------------- --------------------- 5,495,454 4,900 3,766
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27. Financial Data Schedule (b) Reports on Form 8-K None -9- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LESLIE'S POOLMART Date: August 12, 1996 /s/ Robert D. Olsen --------------------------------- Robert D. Olsen Chief Financial Officer -10- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-28-1996 DEC-31-1995 JUN-29-1996 123 0 4,188 0 50,097 59,375 33,294 0 101,753 46,108 0 0 0 32,379 0 101,753 0 106,899 0 64,405 127 0 1,590 7,065 2,932 4,133 0 0 0 4,133 .61 .60
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